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Home » Daily Briefing » Daily briefing - 06 June 2019

Daily briefing - 06 June 2019

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ING created Yolt back in 2017 as an early player in Open Banking. The app collates information from across users' banking services and organises the information in one place; it started life first in the UK where Open Banking is in the process of step-by-step implementation. Now Yolt has announced a partnership with another bank-friendly fintech, Raisin, which offers a selection of deposit and savings accounts across Europe. "This partnership is a result of both companies' commitment to, and extensive experience with, Open Banking collaboration," according to Raisin, which partners with N26 and Commerzbank along with75 partner banks offering deposits across Raisin's seven platforms. Yolt collaborates with simplesurance, MoneySuperMarket, Anorak, Wealthify, Pensionbee and many others. "The announcement additionally accompanies milestones from both companies: Yolt celebrates its second birthday having exceeded 900,000 registered users, and Raisin has now brokered over 13 billion EUR since launching in 2013."

A common complaint from small businesses is the lack of bespoke service in lending, with SMEs often finding themselves caught between lending segments. Experienced UK hoteliers Simon Rhatigan and Simon Kershaw had a taste of this when they to get funding of £3 million to launch a new hotel. "Then we started talking to the high-street banks and specialist providers and it quickly became obvious that, quite frankly, anything under £2 million wouldn't happen and anything over £10 million was deemed as a major investment, so we fell between two stools, as it were." They considered themselves lucky to find new bank OakNorth, which was armed with good technology and backed by investment from SoftBank's Vision Fund. They appear to be among the lucky ones. Dealing with the Brexit uncertainty, says software business Validis, means that SMEs "are either using external finance to put in place contingency plans or reducing their finance requirements as they delay longer term investment and expansion decisions." The financial data business added that "overall there is declining demand for finance, although, awareness and use of alternatives to traditional finance is rising," the financial data specialist firm added. That's good news for fintechs.

Michael Lafferty writes: MasterCard and Visa would be well advised to carry out more demanding due diligence enquires before allowing fintechs to join their networks. Come to think of it, they should go back and take another look at those that are already issuing payment products with the famous global acceptance marques in multiple countries and continents. They will find one or two claiming to offer products like credit cards on the other side of the world when they have no known expertise in revolving cards in their home markets. Chances are that more than 90 percent of fintechs will fail, and some may not be as wholesome as they claim either. Serious brand damage to the global networks is inevitable if a digital bank breaks bad. We'll hear screams of House of Cards from the media if a cross-border fintech fails, which could in turn could spark something far worse — a run on banks in general. Banking regulators and governments have been falling over themselves for years to promote their cities as fintech capitals, encouraging fintechs to operate in sandboxes and to experiment without much scrutiny or regulation. Visa and Mastercard have undoubtedly felt pressurised to adopt a similar approach — and their rising stock prices show that investors often approve when they sign up some big fintech names. In retrospect the payment networks probably did not realise that their valuable global brands would become symbols of five-star accreditation for some fintechs to go global with what are often flimsy business models. They need to move fast to correct this.

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